Britain’s plan for a temporary customs “backstop” to solve the Irish border issue is “not acceptable” and any fall-back option cannot be time-limited, the European Parliament’s chief Brexit co-ordinator has told MPs.

Guy Verhofstadt said the Government’s position that the backstop of continuing UK alignment with the EU customs union would cease by the end of 2021 if no other solution was found left him “puzzled”.

Addressing MPs in London on Wednesday, the former Belgian prime minister said his understanding of a backstop was “a permanent system that is there that you don’t use”, saying the EU would seek a deal over the key Brexit sticking point.

He told MPs on the Exiting the European Union Committee: “I have never seen a backstop that is used for one year and then it disappears.

“No, a backstop is a fall-back position that you have in your pocket and you hope that you have never to use it. That is a backstop, in my opinion.

“That (the temporary backstop) was not in the proposal of the UK Government. I’m a little bit puzzled by the way the UK Government sees now that problem.”

Mr Verhofstadt was speaking at the first of two grillings by MPs in Westminster on Wednesday. He was due to face the Home Affairs Committee in the afternoon.

On Tuesday, Brussels warned that serious differences remain over how to deal with the border between Northern Ireland and the Republic after Brexit.

Advances have been made in a number of areas, such as customs, VAT and nuclear waste regulation, chief negotiator Michel Barnier said, but “a lot more work” needs to be done to meet the October deadline.

Mr Verhofstadt said that ending the backstop in 2021 would mean customs authorities would have to apply three different systems in three years, which was something to “avoid absolutely”.

He said he was looking forward to the Government’s white paper, due to set out the position on leaving the EU.

He added: “I think that is it still possible to have for October/November an agreement on the political declaration. For that we need to speed up, certainly the negotiations in the coming months.”

Of the proposals for permanent arrangements on the Irish border being worked up by the UK Government, Mr Verhofstadt dismissed Theresa May’s favoured “customs partnership” as impossible, and said he was “sceptical” that the “maximum facilitation” scheme preferred by Boris Johnson could ever work.

Max Fac would require scanners and cameras at the border, which was “a dangerous thing to do and could cause a return to violence”, he said.

Mr Verhofstadt said that, while quitting the EU, the UK was seeking to retain enhanced involvement in EU structures and agencies like the European Arrest Warrant, Galileo and Euroatom, including some where it had previously negotiated an opt-out, telling the committee: “That doesn’t make sense.”

In the case of the exclusion of British companies from parts of the Galileo satnav programme, the EU was applying rules approved by the UK several years ago which restrict the involvement of non-EU countries, he said.

The only way to maintain Britain’s level of involvement in Galileo would be “to change the basic rules of the programme”, he said, adding: “I don’t see for the moment any wish to open the regulation of the Galileo programme.”

Challenged over the EU’s failure to offer concessions during talks, Mr Verhofstadt said: “It is not a question of trade-offs. This is not a classical negotiation, we have to take a rules-based approach as described in the treaty.

“The difficulty of this negotiation is a little bit the lack of recognition from one side that this is a rules-based system and that we can’t invent a relationship or partnership that goes against those rules.”

But committee member Jacob Rees-Mogg told him: “It is a rules-based system when it suits the EU and amazingly flexible when it doesn’t.

“The EU makes rules and it can make rules to suit circumstances if it chooses to, but by a voluntary decision it is choosing to say that its rules are sacrosanct, when in other areas it is much more flexible.”

The European Parliament is backing an association agreement to govern relations between the EU and UK after Brexit, similar to those already struck with countries including Ukraine.

But Mr Verhofstadt insisted the framework was flexible and would allow the UK to wrap up elements like future economic and security relations inside a single agreement which is tailor-made for Britain and different from the Ukraine accord.

Without an association arrangement, multiple agreements would be required, meaning “we are going to be in ratification and uncertainty for more than a decade or even two decades”, he warned.

Mr Verhofstadt said he was hopeful that negotiations on the withdrawal agreement and a political declaration on the future relationship could be concluded by October or November.

If this was achieved, he said it would be “possible” to finalise details of the EU-UK trade deal by the time the transition ends in December 2020, dismissing suggestions that the process could take years.

But he said if talks drag on beyond the end of 2018, the European Parliament will not have time to ratify any agreement in time for the March 29 2019 date of Brexit, a process which will take around three months.

Mr Verhofstadt told the committee: “The worst scenario for both parties is no deal. The disruption that would create to the economy, not only on the continent but certainly in Britain, would be huge and that we have to avoid.”

The former Belgian prime minister said the Brexit vote appeared to have resulted in a reduced appetite for withdrawal in other member states, while fuelling interest in EU reform.

Even the Five Star Movement and League parties in power in Italy now say it would be “stupid” to take their country out of the EU, he said.